Question 1

If a person who works in a coal mine gets paid more than a person with a similar background and skills who works in a safer job, then

Accepted Answer

A)  coal miners must have greater human capital than others. 
B)  we have observed a compensating differential. 
C)  coal miners must be more attractive than other workers. 
D)  we have evidence of discrimination against workers outside the coalmine. 
A)  coal miners must have greater human capital than others. 
B)  we have observed a compensating differential. 
C)  coal miners must be more attractive than other workers. 
D)  we have evidence of discrimination against workers outside the coalmine. B

Question 2

All of the following would tend to increase a worker's wage except

Accepted Answer

A)  working the night shift. 
B)  working harder. 
C)  more education. 
D)  having a greater amount of natural ability. 
E)  doing a job that is fun. 
A)  working the night shift. 
B)  working harder. 
C)  more education. 
D)  having a greater amount of natural ability. 
E)  doing a job that is fun. E

Question 3

Explain the role that consumers play in perpetuating discrimination in labour markets.

Accepted Answer

Consumers are able to exercise their biases when they purchase goods and services. For example, if consumers prefer to have female personal trainers than male personal trainers, then firms may respond to these preferences by paying a higher wage to attract female personal trainers. The higher wage paid to women based solely on their gender (or the lower wage paid to male trainers based solely on their gender) would be an example of discrimination driven by consumer preferences.

Question 4

An increase in the demand for a firm's output

Accepted Answer

A)  decreases the prosperity of the firm but increases the prosperity of the factors hired by the firm. 
B)  decreases the prosperity of both the firm and the factors hired by the firm. 
C)  increases the prosperity of both the firm and the factors hired by the firm. 
D)  increases the prosperity of the firm but decreases the prosperity of the factors hired by the firm. 
A)  decreases the prosperity of the firm but increases the prosperity of the factors hired by the firm. 
B)  decreases the prosperity of both the firm and the factors hired by the firm. 
C)  increases the prosperity of both the firm and the factors hired by the firm. 
D)  increases the prosperity of the firm but decreases the prosperity of the factors hired by the firm.

Question 5

If both input and output markets are competitive and firms are profit maximizing, then in equilibrium each factor of production earns

Accepted Answer

A)  an amount equal to the price of output times total output. 
B)  the amount allocated by the political process. 
C)  an equal share of output. 
D)  the value of its marginal product. 
A)  an amount equal to the price of output times total output. 
B)  the amount allocated by the political process. 
C)  an equal share of output. 
D)  the value of its marginal product.

Question 6

Figure 1 Labour (number of workers)

$ \begin{array}{cccc}
 \text { Labour (number of } & \text {  Output } & \text { Marginal Product } & \text { Value of MPL } \
 \text { workers) } & \text {per hour  } & \text {  of Labour (MPL) } \
\hline0 & 0 \ 
1 & 5 \ 
2 & 9 \ 
3 & 12 \ 
4 & 14 \
 5 & 15
\end{array} $
-Refer to Figure 1. What is the marginal product of labour as the firm moves from using three workers to using four workers?

Accepted Answer

A)  0 
B)  2 
C)  8 
D)  12 
E)  14 
A)  0 
B)  2 
C)  8 
D)  12 
E)  14

Question 7

Which of the following explanations of wage differentials is not likely to be true?

Accepted Answer

A)  Men have more human capital than women. 
B)  Employers in competitive markets are bigots. 
C)  Men have more job experience than women. 
D)  Minimum wage legislation maintains differences in pay between jobs 
A)  Men have more human capital than women. 
B)  Employers in competitive markets are bigots. 
C)  Men have more job experience than women. 
D)  Minimum wage legislation maintains differences in pay between jobs

Question 8

An individual firm's demand for a factor of production

Accepted Answer

A)  slopes downward because an increase in the production of output reduces the price at which the output can be sold in a competitive market, thereby reducing the value of the marginal product as more of the factor is used. 
B)  slopes downward due to the factor's diminishing marginal product. 
C)  slopes upward due to the factor's increasing marginal product. 
D)  is perfectly elastic (horizontal) if the factor market is perfectly competitive. 
A)  slopes downward because an increase in the production of output reduces the price at which the output can be sold in a competitive market, thereby reducing the value of the marginal product as more of the factor is used. 
B)  slopes downward due to the factor's diminishing marginal product. 
C)  slopes upward due to the factor's increasing marginal product. 
D)  is perfectly elastic (horizontal) if the factor market is perfectly competitive.

Question 9

List the productivity factors that may explain the differences in pay between men and women in similar occupations. Do any of these factors arise as a result of cultural or social traditions? If so, describe how changes in social relationships will affect the pay gap over time.

Accepted Answer

Job experience, education, lif

Question 10

At least some of the difference in pay between men and women can be explained by the fact that, on average, men may do more unpleasant jobs.

Accepted Answer

A) True 
 B)False

Question 11

Walter's Wheat Farm sells its output and hires its labour in perfectly competitive markets. In the short run, Walter can vary only one input, labour. When Walter is producing in short-run equilibrium, all of the following conditions, except one, will necessarily be satisfied. Which is the exception?

Accepted Answer

A)  The value of marginal product of labour equals the wage rate. 
B)  The marginal cost curve crosses the marginal revenue curve from below. 
C)  Marginal revenue equals the price of the firm's output. 
D)  The firm's total revenue will decrease if more labour is hired. 
A)  The value of marginal product of labour equals the wage rate. 
B)  The marginal cost curve crosses the marginal revenue curve from below. 
C)  Marginal revenue equals the price of the firm's output. 
D)  The firm's total revenue will decrease if more labour is hired.

Question 12

If two jobs require the same amount of skills and experience, the job that pays the most is most likely to be the one that is

Accepted Answer

A)  unpleasant. 
B)  discriminatory. 
C)  safe. 
D)  fun. 
E)  easy. 
A)  unpleasant. 
B)  discriminatory. 
C)  safe. 
D)  fun. 
E)  easy.

Question 13

Which of the following is true regarding the earnings of attractive versus unattractive workers?

Accepted Answer

A)  Attractive people tend to earn less because attractive people are viewed as shallow and more self-absorbed and, therefore, as less productive. 
B)  Attractive people tend to earn more because they may actually have a larger value of marginal product. 
C)  Attractive people tend to earn more because attractive people usually have greater human capital. 
D)  Attractive people tend to earn less because attractive people usually have less human capital. 
A)  Attractive people tend to earn less because attractive people are viewed as shallow and more self-absorbed and, therefore, as less productive. 
B)  Attractive people tend to earn more because they may actually have a larger value of marginal product. 
C)  Attractive people tend to earn more because attractive people usually have greater human capital. 
D)  Attractive people tend to earn less because attractive people usually have less human capital.

Question 14

Competitive markets tend to

Accepted Answer

A)  increase labour market discrimination because some workers can charge more for their services than other workers in a competitive market. 
B)  have no impact on labour market discrimination. 
C)  reduce labour market discrimination because non-discriminating firms will employ cheaper labour, earn more profits, and drive discriminating firms out of the market. 
D)  increase labour market discrimination because bigoted employers can charge any price they want in a competitive market to cover the cost of their discrimination. 
A)  increase labour market discrimination because some workers can charge more for their services than other workers in a competitive market. 
B)  have no impact on labour market discrimination. 
C)  reduce labour market discrimination because non-discriminating firms will employ cheaper labour, earn more profits, and drive discriminating firms out of the market. 
D)  increase labour market discrimination because bigoted employers can charge any price they want in a competitive market to cover the cost of their discrimination.

Question 15

A decrease in the supply of farm tractors will cause all but which of the following?

Accepted Answer

A)  an increase in the rental rate for tractors 
B)  a decrease in the rental rate of farmland 
C)  an increase in the value of the marginal product of tractors 
D)  an increase in the wage of farm workers 
A)  an increase in the rental rate for tractors 
B)  a decrease in the rental rate of farmland 
C)  an increase in the value of the marginal product of tractors 
D)  an increase in the wage of farm workers

Question 16

Economists have hypothesized that the widening gap between the wages of unskilled workers and skilled workers may be due to

Accepted Answer

A)  decrease in the demand for unskilled workers because of increases in technology and increases in international trade. 
B)  increase in the number of unskilled workers available due to immigration into the UK. 
C)  decrease in the demand for unskilled workers because workers are more poorly educated. 
D)  increase in the number of unskilled workers available because workers are more poorly educated. 
A)  decrease in the demand for unskilled workers because of increases in technology and increases in international trade. 
B)  increase in the number of unskilled workers available due to immigration into the UK. 
C)  decrease in the demand for unskilled workers because workers are more poorly educated. 
D)  increase in the number of unskilled workers available because workers are more poorly educated.

Question 17

A new technology that increases the productivity of chefs has what effect on the labour market for chefs?

Accepted Answer

A)  The wage rate will rise, and quantity of chefs employed will fall. 
B)  The wage rate will rise, and the quantity of chefs employed will rise. 
C)  The wage rate will fall, and quantity of chefs employed will fall. 
D)  The wage rate will fall, and the quantity of chefs employed will rise. 
A)  The wage rate will rise, and quantity of chefs employed will fall. 
B)  The wage rate will rise, and the quantity of chefs employed will rise. 
C)  The wage rate will fall, and quantity of chefs employed will fall. 
D)  The wage rate will fall, and the quantity of chefs employed will rise.

Question 18

The demand for a factor is considered to be a derived demand because it is derived from the firm's decision to supply output in another market.

Accepted Answer

A) True 
 B)False

Question 19

The most important factors of production are

Accepted Answer

A)  labour, land, and capital. 
B)  water, earth, and knowledge. 
C)  money, stocks, and bonds. 
D)  management, finance, and marketing. 
A)  labour, land, and capital. 
B)  water, earth, and knowledge. 
C)  money, stocks, and bonds. 
D)  management, finance, and marketing.

Question 20

It is not considered discrimination when an employer offers different opportunities to individuals that differ only by their

Accepted Answer

A)  productivity. 
B)  age. 
C)  sex. 
D)  race. 
A)  productivity. 
B)  age. 
C)  sex. 
D)  race.

Exam 17: The Economics of Factor Markets

If a person who works in a coal mine gets paid more than a person with a similar background and skills who works in a safer job, then

All of the following would tend to increase a worker's wage except

Explain the role that consumers play in perpetuating discrimination in labour markets.

An increase in the demand for a firm's output

If both input and output markets are competitive and firms are profit maximizing, then in equilibrium each factor of production earns

Figure 1 Labour (number of workers) Labour (number of Output Marginal Product Value of MPL workers) per hour of Labour (MPL) 0 0 1 5 2 9 3 12 4 14 5 15 -Refer to Figure 1. What is the marginal product of labour as the firm moves from using three workers to using four workers?

Which of the following explanations of wage differentials is not likely to be true?

An individual firm's demand for a factor of production

List the productivity factors that may explain the differences in pay between men and women in similar occupations. Do any of these factors arise as a result of cultural or social traditions? If so, describe how changes in social relationships will affect the pay gap over time.

At least some of the difference in pay between men and women can be explained by the fact that, on average, men may do more unpleasant jobs.

If two jobs require the same amount of skills and experience, the job that pays the most is most likely to be the one that is

Which of the following is true regarding the earnings of attractive versus unattractive workers?

Competitive markets tend to

A decrease in the supply of farm tractors will cause all but which of the following?

Economists have hypothesized that the widening gap between the wages of unskilled workers and skilled workers may be due to

A new technology that increases the productivity of chefs has what effect on the labour market for chefs?

The demand for a factor is considered to be a derived demand because it is derived from the firm's decision to supply output in another market.

The most important factors of production are

It is not considered discrimination when an employer offers different opportunities to individuals that differ only by their

What Is Economics

Thinking Like an Economist

The Market Forces of Supply and Demand

Elasticity and Its Applications

Background to Demand: Consumer Choices

Background to Supply: Firms in Competitive Markets

Consumers, Producers and the Efficiency of Markets

Supply, Demand and Government Policies

The Tax System

Public Goods, Common Resources and Merit Goods

Market Failure and Externalities

Information and Behavioural Economics

Firms Production Decisions

Market Structures I: Monopoly

Market Structures Ii: Monopolistic Competition

Market Structures Iii: Oligopoly

Income Inequality and Poverty

Interdependence and the Gains From Trade

Measuring a Nations Well-Being

Measuring the Cost of Living

Production and Growth

Unemployment

Saving, Investment and the Financial System

The Basic Tools of Finance

Issues in Financial Markets

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Business Cycles

Keynesian Economics and the Is-Lm Analysis

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Supply-Side Policies

Common Currency Areas and European Monetary Union

The Financial Crisis and Sovereign Debt

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